Greece faces IMF aid deadline

Athens, July 3, 2013

Greece has three days to reassure Europe and the International Monetary Fund (IMF) it can deliver on conditions attached to its international bailout in order to receive the next tranche of aid.

The lenders are unhappy with progress Greece has made towards reforming its public sector, a senior euro zone official involved in the negotiations said, while another said they might suspend an inspection visit they resumed on Monday.

Athens, which has about 2.2 billion euros of bonds to redeem in August, needs the talks to conclude successfully. If they fail, the IMF might have to withdraw from the 240 billion euro bailout to avoid violating its own rules, which require a borrower to be financed a year ahead.

That would heighten the risk that concerted efforts by policymakers over the past nine months to keep a lid on the euro zone crisis could unravel, at a time when tensions are rising in other countries.

Portugal's Finance Minister Vitor Gaspar, the architect of its austerity drive under an EU/IMF bailout, resigned on Monday in a potential blow to his country's planned exit from an EU-IMF rescue programme.

Political tension has also increased in Italy, where Prime Minister Enrico Letta called a government meeting after a coalition partner threatened to withdraw.

Athens and its creditors resumed talks on Monday to unlock 8.1bn euros ($10.6bn) of rescue loans, after a two-week break during which the government almost collapsed over redundancies at state broadcaster ERT.

Euro zone finance ministers are scheduled to meet on July 8 and discuss the situation in Greece, which is in its sixth year of recession and has seen unemployment surge to record highs.

Unemployment has hit a record 27 per cent and Greeks have lost about a third of their disposable income at an average as a result of bailout-imposed austerity policies.-Reuters